Undercover carbon cops ready to pounce

Phillip Hudson
Herald Sun
June 08, 2012

SHOPKEEPERS and business owners beware. The quiet guy in the suit waiting in line could be an undercover carbon cop.

In fact, it could be the top carbon cop – Australian Competition and Consumer Commission chairman Rod Sims.

With just over three weeks to go until the controversial carbon tax begins, Sims is in the hot seat. It’s his job to make sure consumers don’t get ripped off by businesses wrongly using the carbon tax as an excuse to increase prices.

Tony Abbott’s mantra is that this is a toxic tax that will touch every aspect of daily life – when you turn on the lights, use a heater, buy a cup of coffee or get in a taxi.

He says it will be a wrecking ball through the economy.

Julia Gillard’s response is that Abbott’s claims are exaggerated and overall prices will rise by only 0.7 per cent – less than a cent in the dollar.

For a typical household, the Government estimates the flow-on price effects will be about $9.90 a week and they are covering this with average compensation of $10.10 a week.

Lower and middle-income families will get a cash splash of carbon compensation and other payments, which Gillard says will leave many better off, even if they don’t believe her.

Caught in the middle is Sims. How well he and his team perform may well determine how voters react to the tax.

If prices rise by more than expected, they will agree with Abbott. If price rises really are in line with Treasury predictions, and are covered by the massive compensation, then voters may decide the carbon tax is not that big a deal.

The ACCC played a similar critical role during the introduction of the GST 12 years ago.

Back then Allan Fels was the prices supremo and secret weapon for the Howard government.

Despite his slightly dishevelled kindly uncle routine, Fels played a significant role in keeping a lid on the GST. He charmed and terrified business, and was quick to pounce on any digression from the rules with his razor sharp knowledge of consumer law.

Sims, who was born and raised in Lorne and hails from a long line of Apollo Bay farmers and small business operators, is facing his biggest test since taking over at the ACCC 10 months ago after a distinguished career, most recently regulating prices in NSW.

He says the rules are simple. Business can in the usual way charge whatever price it likes for goods and services but it must not wrongly blame the carbon price.

If you say the carbon price is the reason for a $10 price rise you have to be able to prove it. Wrongdoers can face fines of up to $1.1 million.

Sims says in most cases calculating the impact of the carbon tax will be straight-forward. There is a lot of information available about price inputs and businesses should not make guesses.

Unlike the GST, the ACCC has not produced an official guide for households and stores showing the price rises allowed.

This is because the GST involved a new tax being imposed on goods and services to replace existing taxes. The carbon tax is not charged at the checkout.

It is being imposed on the 500 biggest polluters, such as power companies, big energy users or landfill operators. They will pass it on to their customers but the impact can vary, depending on their energy use.

That’s why the ACCC is warning business it needs to be able to justify claims that price rises are due to the carbon tax.

Sims warns shopkeepers and sales staff they must be able to prove what they tell customers, the signs they display and the information they include in advertising and on websites.

“They could be telling a member of the ACCC, they could be telling the chairman of the ACCC,” he cautions. “We’ll have people down town wandering around, absolutely we will. I think people will be calling to let us know, but we’ll be looking as well.”

Sims, who does not yet enjoy the profile of Fels, will be able to fly under the radar. He could be in your shop right now.